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Labour Market in Pakistan Issues and Implications

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Introduction of LFS• Federal Bureau of Statistics has been carrying out Labour Force Survey (LFS) since 1963.• The questionnaire was revised overtime.• Since 2005, the quarterly survey practice has been launched.• The sample size of 2009-10 survey is 36,400 households, enumerated in 4 quarters.

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Information in LFS• Socio-demographic characteristics of population ;• Information on dimensions of labour force; i.e. number of persons employed, unemployed, underemployed or out of labour market;• Facts on the engagement in major occupational trades and the nature of work undertaken by the institutions/organizations;• Data on wages, mode of payment and occupations;• Assessment on occupational health and safety of employed persons by causes, type of treatment, conditions that caused the accident/injury and time of recovery; and• Data on the characteristics of unemployed persons including previous job, waiting time invested in the quest for work, their availability for work and expectations for future employment.

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Introduction• The sixth most populous country in the world.• 180 million population with 2.05% growth rate.• 54.92 million labour force (42.44 million male and 12.48 million female) with an annual growth rate of 3.7 percent.• Rural areas have almost more than double share in the total employment .

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Demographic dividend inPakistan• Situation of moving from high fertility and high mortality to low fertility and mortality….• This transition has brought sizeable changes in the age distribution of population.• Is a “demographic gift” to the economy

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MDG goals• Regarding education, MD goal was to achieve universal primary education.• Regarding the labour market, the initial MDGs only covered the gender equality by promoting share in non-agriculture jobs. It were revised in 2007 and the employment efficiency has also been included.i. Growth rate of labour productivity (GDP per person employed);ii. Employment-to-population ratio;iii. Proportion of employed people living below the poverty line; andiv. vulnerable employment rate.

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HR policy for recruitment• NTS provide services for bulk recruitment• For limited recruitment, SBP has been adopting ‘Employer of Choice’ policy. During 2007-08, about 166 graduates and professionals have been recruited by this policy.• Online recruitment

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Performance Measurement andImprovement System (PMIS)• Online system was introduced in 2002 which enable each employee to submit his/her planning, performance/achievements and appeal. Employees can also see their performance rankings on their own from ‘level 1’ (excellent) to ‘level 5’.• The promotion policy was also linked with this performance.• Appreciation letter were given by departmental heads to ‘level 1’ performers

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Background• The recent global financial crisis soared the global unemployment rates all around the globe.• Within Asia, East-Asia was heavily effected, while South-Asia was less effected.• Labor markets must have the flexibility to shift workers from one economic activity to another rapidly at low cost. Efficient labor markets must also ensure relationship between worker incentives and their efforts, as well as equity in the business environment between women and men.

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Issues of Job mismatch• Poor educational and labour policies lead to issues of job mismatch.• A variety of socio-demographic characteristics, customs and barriers are causing the job mismatch especially for women in Pakistan .• Educational system is not coping with the right demands of labour market and following a variety of tiers.• The employment is not keeping pace with labour force participation.• Imperfections are rising including rising job search periods, rising share of informal economy, rising risks of vulnerability and educated unemployment especially for female and youth.• Job mismatch has three dimensions.

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Government Policies andProgrammes • Pakistan has so far launched six labour polices in 1955, 1959, 1969, 1972, 2002 and 2010. • During FY02-FY10 period, around 70-80 percent of the PRSP budget has been spent on only three sectors: human development, rural development and safety nets. • Various micro-finance rozgar schemes are also assisting the poor. • Labour Market Information and Analysis (LMIA) Unit was established in 2006. • National Internship Program (NIP) was launched in 2007 to provide internship to educated youth. • To develop skilled labour force, the government has established five Skill Development Councils (SDCs) one each at Islamabad, Lahore, Karachi, Peshawar and Quetta. • National Migration Policy 2008 to promote overseas migration

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Silent features of LabourPolicy 2010 • The Government will insure full adherence of labour laws and workers with friendly environment in all establishments to promote decent work in the country. • Raising the minimum wages by 16 percent from Rs. 6,000 to Rs. 7,000 per month. All industrial, commercial and other establishments registered under any law shall pay wages to the employees through Cheque/Bank transfer. • In order the monitor the implementation of labour laws pertaining to wage, working environment and time, a Tripartite Monitoring Committees will be set up at district, province and federal level. • LIMA will be established through the creation of Human Resource Centers at various cities. • Contract employees within the public sector will be regularized. • A comprehensive Social Insurance for old-age benefits and health services will be introduced on self-registration/voluntary basis to allow all workers in formal and informal sector of economy, including self employed persons, to benefit from it. • In cases where the social security hospital has no facilities for treatment, the worker shall be referred to any public/private hospital and the respective Social Security Institution will bear all costs of treatment.

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Key objectives of NAVTEC Skillstrategy 2009-13• Providing relevant skills for industrial & economic development through introducing competency based training, increasing the role of the private sector and encouraging entrepreneurship.• Improving access, equity and employability by focusing on skills for women, disadvantaged groups, providing career guidance to youth and vocational education in schools• Assuring quality by streamlining policymaking, establishing a national qualifications framework, research and training of trainers

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Diagnostic Analysis of BindingConstraintsPolicy gaps and poor implementation and lack of targeting policies• Pakistan has long history of social action programs i.e. land reforms, Village Aid program (1952–1961), Rural Works Programme (1963–1972), People’s Works Programme (1972–1982), the Integrated Rural Development Programme (1972–1980), the Five- Point Programme (1985–1988), the Tameer-e-Watan Programme (1991), Social Action Programme I & II (1985–2002) and PRSP (2001-onward).• SAP, a targeted program also remained fail because of underutilization of funds (less than 60 percent budget was consumed out of allocated Rs. 600 billion), lack of awareness, absence of people’s participation, and centralized decision-making.

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Poverty levels in China andPakistan, 1978-2005• In 1978, rural poverty in both China and Pakistan was around 33 percent. In 2005, it was 28 percent in Pakistan and only 2.5 percent in China.• Fluctuations in Poverty in Pakistan during last three decades (1960s, 1980s, 2007/08)• Urban poverty in Pakistan has also been higher than China.

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Policy implications andrecommendations• Create socio-economic assets for the poor• Ensure macroeconomic and political stability• Integration of markets - development of non-farm sector to generate employment opportunities• Remove regional socio-economic disparities• Need massive public investment on education and health, particularly the technical education• Planned urbanization is engine of employment generation• Include the role of private sector• Coordination among various demand and supply side stakeholders of labour market is prerequisite• Ensure equality and quality of education across the regions and institutes with dynamic education policy• Tracer type studies should be conducted to understand the employment patterns and skills demanded by economy• Knowledge based policies for youth and for female• Improve the labour market information system